Rishi Sunak set to extend coronavirus business loan support schemes
THE Chancellor is expected to extend the coronavirus business loan support scheme to get them through a second lockdown, according to reports.
Firms will have until the end of November to apply for the state-backed loans introduced during the first few months of lockdown, reports the Financial Times.
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The businesses interruptions loans and Future Fund are currently due to close to new applicants at the end of this month, while the bounce back loan deadline is at the start of November.
The scheme encourages banks to lend to ailing businesses by promising they will be guaranteed by the state.
Figures show that so far it has backed £53billion in lending, £35billion of which is through the bounce back scheme.
The extension will give banks until the end of the year to process the applications.
What help is out there businesses and for self-employed workers?
THE government has introduced the following measures to help self-employed workers and businesses during the coronavirus outbreak:
Income-tax deferrals: Self-assessment income tax payments, that were due in July, can be deferred to the end of January next year.
Rent support: Businesses who are struggling to pay their rents are protected from eviction until the end of June.
Coronavirus business interruption loan scheme: SMEs can get loans and overdrafts of up to £5million for up to six years and the government will guarantee up to 80 per of these.
Grants of up to £10,000: Small firms can get grants of up to £10,000 to help with ongoing business costs.
VAT payments: VAT payments can be deferred for three months.
Tax bill help: SMEs that cannot afford their tax bills can ask HMRC for a “time to pay” arrangement so any debt collection is suspended.
Business rates holiday: A 12-month business rates holiday has been introduced for many businesses.
It’s hoped the state-backed cash will help firms get through another period of tighter restrictions and reduce mass jobs losses expected when furlough ends on October 31.
Today, Britain’s top scientists issued a Doomsday Covid warning to the nation as the UK heads into colder months, with the Prime Minister expected to make a speech tomorrow.
The number of coronavirus cases in the UK has soared in recent weeks, with hospitalisations doubling every eight days.
But there are fears that a second lockdown in England could cause the UK’s economic recovery to stall or even crash again.
It is understood that restrictions will be aimed at stopping social interactions rather than businesses, but undoubtedly there will be a knock on effect on the economy.
What is a bounce back loan?
BOUNCE back loans are for small companies and sole traders whose businesses have been hit by coronavirus.
Under the scheme, which launched on May 4 and is available until November 4, firms can get loans worth up to 25% of their turnover, up to a maximum of £50,000.
These loans are 100% guaranteed by the government, and it will cover the interest on the loans for the first 12 months.
Businesses are then able to pay back the remaining balance over the next five years at a 2.5% interest rate.
The scheme has been described as a “lifeline” although experts have cautioned firms against rushing into debt.
You can’t apply for a bounce back loan and a coronavirus business interruption loan (CBIL).
The CBIL offers more money – between £50,001 and £5million – but is only 80% backed by the government, meaning it’s riskier for banks administering payouts.
Restaurants and bars have had more than half of their trade wiped out in areas where curfews have been enforced by local lockdowns, UK Hospitality said.
Business leaders have been calling on the Treasury to extend the loans but officials have resisted, eager to wind down the costly support, according to the FT’s sources.
A HM Treasury spokesperson told The Sun: “As we have repeatedly said we keep our package of economic support under constant review.
“We have already provided unprecedented support worth £160billion to businesses impacted throughout this period.
“This includes government-backed loans, cutting VAT for the tourism and hospitality sectors, grants of £25,000 and the Coronavirus Job Retention Scheme, which has supported the wages of 9.6 million people so far.”
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Earlier this month, Lloyds Bank came under fire from the regulator after it told 30,000 small business customers to open paid-for bank accounts with them before they could access the government cash.
Hundreds of thousands of small businesses could receive a payout from insurers if they have been hit by the impact of the pandemic.
Small businesses have been warned to check they’ve got the right coronavirus loan or face paying “twice as much”.